How Distributed Ledgers Are Disrupting HR Technology

When it comes to enterprise
IT discussions, human resources (HR) technology has not gotten the same hype
enjoyed by other technologies like blockchain, big data and the Internet of Things.

Despite being outside of the
spotlight, HR technology has grown and improved steadily over the past year. A
PricewaterhouseCoopers report showed that 73 percent of organizations have
shifted at least one HR process to the cloud in 2017. Most users also report
satisfaction regarding improvements in the services and support that HR
technology vendors provide.

It’s no secret that workplaces
and workforces are changing. Because of this, HR is now seeing new challenges
arise in areas like automation, remote work, fraud and payments. As such, HR
technology is now starting to look into emerging solutions such as blockchain
technology to address these concerns. Known mainly as the technology powering
cryptocurrencies such as Bitcoin, blockchains are now finding applications
across a variety of business functions, including HR. There appears to be wide interest
in a technology that provides decentralized, immutable and transparent record
keeping.

For instance, Nick Macario,
the CEO of the data exchange platform Dock, said, “Blockchain [technology]
will impact every HR and recruiting system in the world. These legacy solutions
are all powered by user data, which is currently centralized, creating
fragmented experiences and inefficient systems. Blockchain [technology] will
provide fresh, up to date, consistent data, which will move freely between
apps.”

Here are three ways
blockchain technology is proving to be an up-and-coming disruptive force in HR
technology:

1. Fighting
Credential Fraud

Despite the many ways
organizations can validate applicants’ claims in their résumés today, many applicants
still fib and embellish their credentials. Per Inc., 85 percent of companies have
reported catching job seekers being deceitful about their applications.
Blockchain technology can help thwart this by providing a means for credentials
to be put on a transparent and immutable record.

Several universities are
already exploring the use of blockchains to keep records of their roll of
graduates. MIT, for example, launched a pilot program that gave select
graduates the option to receive
their diplomas digitally.
Blockchain transaction records can be used to prove ownership of these digital
diplomas. Having such mechanisms would make it easy to verify if one truly
graduated from a particular institution.

A similar effort can be made
for other professional details such as employment histories and even
performance. Dock, for instance, allows users to consolidate their professional
profiles and social network linkages and secure the information using the
Ethereum blockchain. The platform allows professionals to effectively manage their
professional online presence. It also gives them the confidence to share their
credentials knowing that details can be readily verified through secure means.

Certifications and licenses
can also be secured using blockchains. Accreditation bodies and licensing
commissions could look into using blockchain technology to help minimize fraud
and misrepresentation. The state of Illinois is already exploring the use of
the technology for medical
license issuance, for
instance.

2.
Facilitating
Remote Work

Leading freelancing
service Upwork reported that more than
57 million Americans
were freelancing in 2017. More organizations have opened up to employing
contractors to complement their full-time force. While there are already a
number of services that support this ecosystem, there are certain aspects where
blockchain technology can be of further use.

Blockchain-based job
marketplaces are now gaining traction. For example, Ethlance offers
a decentralized job marketplace that uses Ethereum as
its blockchain. The service promises a zero-fee experience and charges only
Ethereum gas fees for blockchain transactions. This is in contrast to most
freelancing platforms, which charge fees to both employers and freelancers.
Some even take up to 20 percent from freelancers’ earnings as their cut for
facilitating transactions. These blockchain job marketplaces effectively cut
out the middleman.

There is also much potential
in the use of smart contracts to facilitate work arrangements. Smart contracts
can be used to keep track of terms between employers and contractors such as
scope of work, timetables and pay. Smart contracts can even be used to automate
payments upon successful submission of work. This process effectively creates
more trust between parties since the system assures their respective mutual
compliance to the terms.

3. Paying
Salaries Using Cryptocurrency

So far, only a few have taken
on using cryptocurrencies to pay employee salaries. Japanese firm GMO Internet is among those already providing
employees this option.
For others, there is still a host of factors that prevents them from seriously
considering the move. To start, there’s the volatility of cryptocurrencies.
Unless the company does its business in cryptocurrencies, price fluctuations
still make the move largely impractical.

However, in the case of
remote work and cross-border payments, cryptocurrencies may actually be a valid
alternative. Payments services like PayPal often charge high fees
and disadvantageous currency conversion rates. Many offshore freelancers bemoan
these charges since they are often the ones who shoulder the costs.

Cryptocurrencies, on the
other hand, have minimal transaction fees. Even Bitcoin, with its relatively
high transaction fees when converted to fiat, can still be cheaper than what
remittance services charge. Cryptocurrencies can also clear much faster than
conventional money transfers. If prices eventually normalize and if
cryptocurrencies gain wider adoption in real-world transactions, there is a
future for a crypto-powered payroll.

Enhancing Trust in the Job Market

While these efforts may seem
to target improving specific areas of HR management, what they collectively
bring is trust into the process. The use of blockchain technology to make
credentials transparent could help change the culture of embellishment that has
grown rampant among job seekers today. Organizations can benefit from this as
they can readily get unbiased information about their applicants, allowing
these companies to hire people who best fit their requirements.

The emergence of
blockchain-based job marketplaces could also benefit job seekers as the
transparency provided by the blockchains could create a more equitable market.
Smart contracts could also help protect parties by guaranteeing the delivery of
work and payments. Cryptocurrencies even offer a fast and secure way to
transmit payments to offshore resources. By easing the concerns in these
areas, employers and professionals could focus more on getting the job done.
Trustful relationships allow for better synergies in the workplace.